Insurance and Salvage

[Jklotz]

Some of you may remember this guy who had his Aquila motor cat destroyed when a moring ball let loose in the BVI. He just posted a video explaining how it all worked out. Insurance denied salvage claim, salvage company went after him for $500k and he ended up losing the boat. Crazy stuff:

 

[psneeld]

If he went to binding arbitration or a full blown maritime court, they are usually fair at assigning salvage awards based on industry rates for certain actions and risk based on location, weather, difficulty...etc.

A lot of "only 1/2 of the story" there. Yes the salvage laws seem unfair to the boater....and that's what insurance is for. He kept saying that if the insurance company did their job he wouldn't have had to go through all this. Does that mean the insurance companies are all getting screwed too? I would think the courts would be addressing the salvage laws differently if they were unfair and powerful insurance companies lobbied/fought against them.

Salvage law has been upheld time and time again....and in my experience, the vast majority of salvages are not done on a "percentage" basis unless it a "rescue salvage" where disaster will happen if a salvage or rescue asset doesn't assist. Many (I would say all 100 up to maybe 200 that I worked on) if not all were based on a time/materials or formula linking those to a standard type sinking at the dock that was usually based on length of boat.

 

[Jklotz]

If he went to binding arbitration or a full blown maritime court, they are usually fair at assigning salvage awards based on industry rates for certain actions and risk based on location, weather, difficulty...etc.

A lot of "only 1/2 of the story" there. Yes the salvage laws seem unfair to the boater....and that's what insurance is for. He kept saying that if the insurance company did their job he wouldn't have had to go through all this. Does that mean the insurance companies are all getting screwed too? I would think the courts would be addressing the salvage laws differently if they were unfair and powerful insurance companies lobbied/fought against them.

Salvage law has been upheld time and time again....and in my experience, the vast majority of salvages are not done on a "percentage" basis unless it a "rescue salvage" where disaster will happen if a salvage or rescue asset doesn't assist. Many (I would say all 100 up to maybe 200 that I worked on) if not all were based on a time/materials or formula linking those to a standard type sinking at the dock that was usually based on length of boat.

He left a lot unsaid about the insurance side of things. I'm curious to know what the problem was from that end.

 

[psneeld]

Very well could have been as easy as calling them first and getting their input/approval.

I know it's a high pressure situation but every boater with insurance should have their insurance companies 24hr number on speed dial. The alternative is to make sure your policy gives you permission to negotiate the salvage contract without approval.

 

[Insequent]

He did say the insurers inspected the mooring area. Maybe they looked at the mooring from which he broke loose. Could be that the mooring was not rated for his boat size, or not properly maintained.

 

[Serene]

He said he would post another video in the future about the denial of claim by the insurance company, but at this stage has started some sort of legal action against them so is not providing any further information.

But when you listen to everything he has said over multiple videos and read the comments where he has replied, it seems there was a decision by insurance at some stage to stop working with him, which seems to be after they sent assessors to the BVI to look at the moorings.

He specifically said they didn't look at his vessel, so I guess they saw all they needed to deny the claim, just by looking at the mooring.

 

[Mambo42]

In his last video he stated that the insurance company only went out to check the mooring buoy, did not even pass by his boat. That basically proves to me they had zero intention of paying for the damage, they were just looking for a way out.
Were mistakes made ? Of course.
But isn't that why you have insurance ? Especially when you pay a hefty premium you expect the insurance to be fair. He did not ground his boat on purpose, he moored the boat in good faith, it was rated up to 60' or 65'and he was not allowed to anchor.

 

[psneeld]

Without reading his insurance policy, it is all just a wild guess.

 

[FWT]

It’s a worthy discussion about which we may never get a good answer.

So, let me ask from another angle.

What are the potential valid reasons why an insurance company can reject such a claim?

 

[psneeld]

If he violated any of the major prohibitions such as navigation limits in his policy or broke the law in any way, and like I posted in post #4.......

If he didn't call the insurer first and negotiated with the salvage company directly, he might have violated the easiest prohibition to deny on.

There could have been many, and easily enforceable. With the investigator just looking at the mooring buoy and not the boat.... that bears keeping an eye on.

 

[lwarden]

I'm very curious about what sort of verbiage in his policy that would allow a denial of claim. Hopefully that comes out in his next video. Stay tuned....

 

[Jklotz]

I did find it interesting how the salvage companies operate and charge. I didn't know that. Sounds like the moral to the story is don't allow anything to happen where one has to deal with them.

 

[READY]

I pulled this from my boat policy with Progressive (Sorry for the lost formatting). Plenty of exclusions to create room for denying a claim. Not all are black and white either. Really probably comes down to the company. Do they intend to pay reasonable claims or are they hell bent to deny for any reason even if it is far removed from the real cause?
Perhaps in the Hillbilly case they will cite business use (making you TubeVideo if his channel is monetized?).

EXCLUSIONS—READ THE FOLLOWING EXCLUSIONS CAREFULLY. IF ANEXCLUSION APPLIES, COVERAGE WILL NOT BE AFFORDED UNDER THISPART I.Coverage under this Part I, including our duty to defend, will not apply to any insured person for:1. bodily injury or property damage arising out of the ownership, maintenance,or use of any watercraft or trailer whilebeingused:a. to carry personsor property for compensationor a fee;b. in any illegal transportationor trade;orc. in any businessor occupation.Subparts a.andc.of thisexclusiondo notapply to useof a watercraft or trailerfor tournamentfishing;2. any liability assumedunderany contract or agreementby you or a relative;3. bodily injury to anemployeeofthatinsured person arisingoutofor withinthecourse of employment.This exclusiondoes not apply to domesticemployees ifbenefits are neitherpaid nor required to be providedunder workers’ compensation,disability benefits, or similar laws;4. bodily injury or property damage resultingfrom, or sustained during practiceor preparationfor:a. any pre-arrangedor organizedi) racing;(ii) stunting;(iii) speedor demolitioncontest or activity;orb. any driving, riding, navigation, piloting, or boating activity conducted on apermanentor temporary racecourse.This exclusion does not apply to bodily injury or property damage resultingfrom the use of a sailboat in any pre-arranged or organized racing or speedcontest, or in practiceor preparationfor any suchcontest;5. bodily injury or property damage due to a nuclear reactionor radiation;6. bodily injury or property damage for whichinsurance:a. is afforded undera nuclearenergy liability insurancecontract;orb. wouldbe affordedundera nuclearenergy liability insurancecontractbut forits terminationuponexhaustionof its limitof liability;67. bodily injury or property damage causedby anintentionalactofthatinsuredperson, or at the direction of that insured person, even if the actual injury ordamageis different thanthat which was intendedor expected;8. property damage to any property owned by, rented to, being transported by,or in the charge of that insured person. The term “property” includes, withoutlimitation, any covered watercraft and any watercraft other than a coveredwatercraft. This exclusion does not apply to a launching ramp, dock, mooringdeviceor boat storage houserented by you;9. bodily injury to you or a relative;10. bodily injury or property damage arising out of the ownership, maintenance,or use of any watercraft or trailer owned by you or furnished or available foryourregularuse,otherthanacovered watercraftor trailerfor whichthis coverage has beenpurchased;11. bodily injury or property damage arising out of the ownership, maintenance,or use of any watercraft or trailerowned by a relative or furnishedor availablefor the regular use of a relative, other than a covered watercraft or trailer forwhichthis coveragehasbeenpurchased.Thisexclusiondoesnotapply to yourmaintenanceor use of such watercraft or trailer;12. bodily injury or property damage arising out of your or a relative’s use of awatercraft or trailer, other than a covered watercraft or trailer for which thiscoverage has been purchased, withoutthe permission of the owner of the watercraft or traileror the person in lawfulpossessionof the watercraft or trailer;13. bodily injury or property damage arising out of the use of a covered watercraft or trailer while leased or rented to others or given in exchange for anycompensation,includingwhilebeingusedinconnectionwitha watercraftsharing program. This exclusion does not apply to the operation of a covered watercraft or trailerby you or a relative;14. punitive or exemplary damages;15. bodily injury or property damage causedby, or reasonably expected to resultfrom, a criminal act or omissionof that insured person. This exclusionappliesregardless of whether that insured person is actually charged with, or convicted of, a crime. For purposesof this exclusion, criminalacts or omissionsdo notincludeviolationsof laws or regulationsgoverning the operationof watercraft;16. bodily injury or property damage arisingoutofpara-sailing, kite skiing, oranyotheractivity involvinga devicedesignedfor flight;17. bodily injury or property damage that occurs becausea covered watercraftis not in seaworthy condition;18. bodily injury or property damage arisingout ofan accidentinvolvinga watercraft or trailer whilebeingtowed by or carried by a land motor vehicle;19. payment for bodily injury, or any other payment or obligation, to any personeligible to receive any benefits required to be provided by you under the JonesAct or Federal Longshoremen’s and HarborWorkers’ CompensationAct;or20. bodily injury or property damage arisingout of an accident whileusinga watercraft as a primary or permanent residence.

 

[SteveK]

Insurance and salvage costs? We all need to read and understand our policies and know in advance of what is covered.
Mine says I must mitigate the loss or damage by taking steps to avoid further loss. Does ask to be notified immediately, I suppose based on that they will tell me what/who to deal with.

 

[psneeld]

I did find it interesting how the salvage companies operate and charge. I didn't know that. Sounds like the moral to the story is don't allow anything to happen where one has to deal with them.

I would NOT use that video on how salvage companies work. I have worked for 2 and there are many different possibilities how it all works. .... and that is just one small part of the US I have experience with.

Listening to any aggrieved person for a completely factual or complete picture isn't the best course of education. What they say may all be true, but it may not be the complete, "big" picture.

 

[READY]

This could be the problem (if he "agreed" upon a contract with the salvage company). Sounds like whether he intended to or not there was at least a verbal agreement when he or his boat manager called them in to assist.

2. any liability assumed under any contract or agreement by you or a relative;

 

[Robster_in_edmonds]

It’s a worthy discussion about which we may never get a good answer.

So, let me ask from another angle.

What are the potential valid reasons why an insurance company can reject such a claim?

Possible reasons for denial:
1. He was outside his policy’s navigation limits; many US insurance policies do not cover areas south of the USA and many restrict areas above a certain limit in Alaska waters; some policies require that you inform the insurer if you are leaving your usual area of operations.
2. He was operating commercially when he did not have a commercial policy. This can include if you charge your passengers to help pay for fuel or more commonly you’re taking friends on a vacation and everyone chips in to pay for the trip. Even worse if you let others use the boat and pay you for it.
3. He tied up on a mooring ball not rated for his vessel size and weight.
4. He was not personally on the vessel at the time of the accident.

We definitely don’t know the whole story…

 

[SteveK]

There are several threads going on this grounding. I do not recall seeing that the claim is denied, only that the insurance agent has gone silent. To me that means they are looking for loopholes, they will delay payout as long as they can, but have not yet said it is denied, have they?
The owners last you tube did not say that. He did say that some people hook up to a mooring ball and at 1000 rpm test it to hold, bad idea.
In my trip to BVI, we moored to balls and saw hundreds of others without incident. I have to wonder if this operator actually tested the ball and caused his own problem. The insurer agent only came to see the mooring ball, not the boat. The boat damages are well documented, no need. The insurer may already be talking with the restaurant insurer about liability.

I stand corrected, post 1 video he does say claim denied

 

[psneeld]

Yep.... and a real pickle when you find you and your loved one (plus maybe wife and family ) on the rocks and taking on water. Along comes a salvor and shouting above the wind and waves whether you want their service of not.

I was in the business and really don't have a good answer. The salvor takes the risk and wants to get paid whether you or your insurance company ponies up. Tough decision sometimes requiring a split second decision as the salvor struggles to keep his boat in position and the rescue equipment ready.

The best answer would be...... be perfectly clear on what your policy says/demands in the case of what I call "rescue salvage" as contact with anyone but the salvor may be impossible.. Once on the beach, rocks or partially/fully sunk....the insurance company should be called immediately/ASAP. If there is no 24 hour emergency contact number, get one or a different insurance company. You might first get a call from authorities or a salvage company. If a salvage company, best to get your insurance company in between...if not immediately available and further damage might occur, make sure in writing you only give limited permission for the necessary work to prevent immediate further damage.

 

[Mambo42]

There are several threads going on this grounding. I do not recall seeing that the claim is denied, only that the insurance agent has gone silent. To me that means they are looking for loopholes, they will delay payout as long as they can, but have not yet said it is denied, have they?
The owners last you tube did not say that. He did say that some people hook up to a mooring ball and at 1000 rpm test it to hold, bad idea.
In my trip to BVI, we moored to balls and saw hundreds of others without incident. I have to wonder if this operator actually tested the ball and caused his own problem. The insurer agent only came to see the mooring ball, not the boat. The boat damages are well documented, no need. The insurer may already be talking with the restaurant insurer about liability.

He did not test the buoy, he only said that some people do that. He also states he had been on the same buoy about a week earlier and when he was ashore his wife was asleep on the boat. When he spoke about that he broke mentally, realizing she could have been dead.
Why this mooring buoy broke we will never know, but it did. The sea was rough, boat was pitching, so was the chain/line of the mooring buoy too short ? When was the last time this buoy had maintenance ? What were the sizes of the boats prior to this one and what did those boats do ?
Main reason for the insurance to deny this claim, in my opinion, would be that this buoy was not an official buoy, operated by an official company. Anything else will not stand in a court, unless of course it is written in the contract that a failed mooring buoy is excluded.

 

[Mambo42]

Yep.... and a real pickle when you find you and your loved one (plus maybe wife and family ) on the rocks and taking on water. Along comes a salvor and shouting above the wind and waves whether you want their service of not.

I was in the business and really don't have a good answer. The salvor takes the risk and wants to get paid whether you or your insurance company ponies up. Tough decision sometimes requiring a split second decision as the salvor struggles to keep his boat in position and the rescue equipment ready.

The best answer would be...... be perfectly clear on what your policy says/demands in the case of what I call "rescue salvage" as contact with anyone but the salvor may be impossible.. Once on the beach, rocks or partially/fully sunk....the insurance company should be called immediately/ASAP. If there is no 24 hour emergency contact number, get one or a different insurance company. You might first get a call from authorities or a salvage company. If a salvage company, best to get your insurance company in between...if not immediately available and further damage might occur, make sure in writing you only give limited permission for the necessary work to prevent immediate further damage.

In theory this all sounds very nice, but knowing how people react when under stress I know that there is a huge difference between theory and practice. Only when you practice continuously for emergency situations you will know what to do when it happens. However, for most of us an emergency is something that takes away 50 to 70 % of the thinking capabilities.
We don't know what happened, but my guess is that his first reaction was: 'I need to get the boat off the beach as fast as possible, in order to limit the damage'. And so they called the emergency services.
Perhaps it was lunch time at the insurance company, but it is also possible the number was somewhere in the papers which were in a boat full of water, we don't know.
But to reject a claim under the pretext that he should have called the insurance first and not one hour later is absurd. He did what was necessary to limit damage, there is nothing else he could have done. If he would have called the insurance first and only then the salvage, what would the insurance have said ? Don't call salvage, we have a guy who is a friend of a friend and he is in St Maarten, he will come to you ? That is not going to happen.
As I see it, this is an insurance company which is finding every reason to avoid a pay out and as a result there are two options. Either they will win and he is out of 2.2 million or they will lose and then they are out of 2.2 million plus punitive damages (after all, he lost his boat).

 

[Sailor of Fortune]

I didn't read the story here but a couple of points to ponder. The premise of admiralty insurance is the owners are required to make best efforts to save, reduce damage to their boat AS IF UNINSURED. This includes accepting salvage services if available.
"Pure salvage" is when a preexisting contract hasn't been signed or agreed to. Such as when a boat strands (goes aground) or breaks free from a mooring and a salvor uses his resources to rectify the situation. This is the most sticky of all salvage situations ,both for salvor and vessel owner. Its not recommended, but sometimes unavoidable.

On the surface,sometimes salvage awards seem to be excessive to laymen and owners. One of the reasons salvors are awarded such fees is to appeal to their greed.... The admiralty courts don't want salvors to turn a blind eye when a ship is in peril...Why would they be encouraged to put men and equipment at risk for time and material type jobs?....

 

[Serene]

There are several threads going on this grounding. I do not recall seeing that the claim is denied, only that the insurance agent has gone silent. To me that means they are looking for loopholes, they will delay payout as long as they can, but have not yet said it is denied, have they?

[SNIP]

See video in Post #1.

Claim denied.
Salvor chasing $760k or thereabouts.
Owner handed boat over to salvor to settle.

 

[psneeld]

In theory this all sounds very nice, but knowing how people react when under stress I know that there is a huge difference between theory and practice. Only when you practice continuously for emergency situations you will know what to do when it happens. However, for most of us an emergency is something that takes away 50 to 70 % of the thinking capabilities.
We don't know what happened, but my guess is that his first reaction was: 'I need to get the boat off the beach as fast as possible, in order to limit the damage'. And so they called the emergency services.
Perhaps it was lunch time at the insurance company, but it is also possible the number was somewhere in the papers which were in a boat full of water, we don't know.
But to reject a claim under the pretext that he should have called the insurance first and not one hour later is absurd. He did what was necessary to limit damage, there is nothing else he could have done. If he would have called the insurance first and only then the salvage, what would the insurance have said ? Don't call salvage, we have a guy who is a friend of a friend and he is in St Maarten, he will come to you ? That is not going to happen.
As I see it, this is an insurance company which is finding every reason to avoid a pay out and as a result there are two options. Either they will win and he is out of 2.2 million or they will lose and then they are out of 2.2 million plus punitive damages (after all, he lost his boat).

I bet you have a lot of experience in rescues and salvage.

I bolded the important tidbits that must be fact.

 

[SteveK]

[SNIP]

See video in Post #1.

Claim denied.
Salvor chasing $760k or thereabouts.
Owner handed boat over to salvor to settle.

Thanks for the correction. Claim denied.
Standing by to hear WHY.

 

[Mambo42]

I bet you have a lot of experience in rescues and salvage.

As a matter of fact...........I do. Did SAR for about 10 years in the Caribbean, then did CSAR (combat SAR) and TRAP (tactical recovery of aircraft and personnel) for about 5 years, was a SAR pilot and RCC / CRCC officer as well, had to deal with all kinds of emergencies out in the Caribbean and former Yugoslavia and I have seen people do the craziest things when they were in a state of stress.
So unfortunately I do know what people do when they are under stress and that is why we took that into consideration during rescue efforts. Some people can think straight, others are no longer functional. It happens and it is a human reaction.

 

[psneeld]

As a matter of fact...........I do. Did SAR for about 10 years in the Caribbean, then did CSAR (combat SAR) and TRAP (tactical recovery of aircraft and personnel) for about 5 years, was a SAR pilot and RCC / CRCC officer as well, had to deal with all kinds of emergencies out in the Caribbean and former Yugoslavia and I have seen people do the craziest things when they were in a state of stress.
So unfortunately I do know what people do when they are under stress and that is why we took that into consideration during rescue efforts. Some people can think straight, others are no longer functional. It happens and it is a human reaction.

Then you should know that people who do the right thing have the greatest chance of success...and that I am trying to pass along to fellow boaters to be prepared rather than blame everyone else for things they could have had control over.

Most of my dealings were with small vessel owners and know the majority don't understand salvage intricacies.

 

[Mambo42]

Then you should know that people who do the right thing have the greatest chance of success...and that I am trying to pass along to fellow boaters to be prepared rather than blame everyone else for things they could have had control over.

Most of my dealings were with small vessel owners and know the majority don't understand salvage intricacies.

That is true, but that does require a lot of training and even then some people still do the wrong thing. You can be prepared as you like, but until you get into a situation you will never know how you react. In the military we drill emergencies so that you can basically go on automatic when you are confronted with them.
It is slightly different in civilian life (to put it mildly) and to expect that untrained people know how to deal with emergencies plus that they will keep a clear mind is not realistic.
Look at the grounding of Costa Concordia ? Even the captain jumped ship.
A friend of mine is captain of a cable repair ship. He told me a harrowing story that happened near Brazil. They were on a repair mission during a storm when the ship started taking on water. Only he and one other crew member were able to function, all 50 others just froze.

It is currently summer in the Med, which means every day it is a mad house in the ports and the marinas when the charter boats come in for a Med mooring. The things you see there are beyond your wildest dreams or nightmares.
I have been in anchorages where there were 40 other boats (mostly blow boats) and they were all fine when it was 5 kts wind. All of a sudden the wind picks up to 20 kts and half the anchorage starts dragging, panic erupts and boats are smashing into each other. Then the wind went on to 30 kts and by the time it reached 40 kts we were with only 2 other boats, all the other ones had dragged their anchor and left in a panic. Mind you, these were all live aboards, not a single charter boat was there at that time.

So to expect a completely clear mind from an owner, who just spend 2.2. million on a new boat, still has not really encountered bad weather, not encountered an emergency and does also not train them (how many pleasure boat sailors actually do ?), is a bit too far fetched.
I fully understand that this guys first thought was: " I have to get this boat off the beach in order to save it'.

As for the mooring buoy failing ? He could not have known that, he could not expect it, he thought he was safe, after all he had been on that same mooring buoy the week before. And I checked today, there is not a single mooring buoy left, the restaurant removed all of them. Now why did they do that ?

 

[psneeld]

If you closely read my post, it says that AFTER the crisis has settled, boat sunk, hard on the rocks or beach, it doesn't take a lot of training to call a number that is laminated and handy in the ditch bag that also has some way of contacting the outside world. Sure that's not always possible but then the salvage team is probably hours away anyway.

If the first thought is get the boat off the beach after its already there and holed...and owns a 2.2 million dollar boat...he needed a lot more boating experience under his belt or a bit more research on how to cruise with it's pitfalls, and learn more about what to do in emergency situations.

 

[Mambo42]

In my opinion you judge people by your own standards and it has taken me a long time as well to realize that my standards are not what the standards of other people are.
If you were former CG you also had the rigorous training that I had in the military and trust me, civilians don't get that type of training, nor are they much interested in that.

Even professionals sometimes run around like chickens without a head, have seen that happening after an aircraft crashed basically right in front of our eyes in 1991.

You and I may have a grab bag, but I can guarantee you that absolutely none of the charter boats here in the Med have a grab bag. Many of the live aboard boats don't even have one. Weird ? Yes, but it happens.
Insurance papers of the boat ? How many people have that printed out ? Most people have that as a PDF in their phone, so what to do when the phone went in the water ?
On top of that, did they have any signal there ? Perhaps they had no signal whatsoever and knowing how the Caribbean works there is always someone who knows someone who has a family member who knows a person who works in salvage. When there is money to be made you will be amazed how many people all of a sudden will show up and start making unwanted phone calls. Then the shouting and screaming starts, drives you mad, but that is the Caribbean.

I know it is very easy to judge people based on our own training by the military and I agree that professionals should be at that level, but the average pleasure boater ? In my opinion you expect way too much from them. If you would assume all of us on TF know exactly what to do, have read the small print of the insurance company and even have a contact person in speed dial, the millions of others, who go out on the water every now and then...............they have absolutely no clue what to do, especially when they are in a stressful situation.